Communications steps up as fraudsters exploit pandemic fears
The ongoing pandemic is driving change in almost every aspect of our lives; from accelerating the shift in attitudes towards traditional working patterns in the City to possibly changing the way we shop forever.
A darker trend has emerged alongside all of this, with online criminals seeing the crisis as an opportune time to take advantage of people’s fears through scams designed to get consumers to act before thinking.
This comes as people are spending an increasing amount of time online during lockdown. Internet providers have reported a surge in online activity since the restrictions on movement were announced, leaving consumers more susceptible to fraud than ever before.
The pandemic shines light on the responsibility banks and other financial institutions have to empathise with their customers, anticipate potential vulnerability and strengthen communications efforts to help protect them from financial harm.
Financial crime has boomed during social isolation
Among these scams is a phishing attempt where criminals send out emails asking for donations to purchase medical preparations and supplies for the NHS to help them fight Covid-19. Other scams play into the current spike in online shopping and home deliveries, where customers are contacted with a fraudulent ‘Track your package’ text and asked to share personal information and card details.
Financial regulators and consumer groups have issued warnings to consumers, with the Pensions Regulator, the Financial Conduct Authority (FCA) and the Money Pensions Service issuing a joint statement warning people against making rash financial decisions amid the rise in fraudulent activity. A similar warning has also been issued by the Personal Investment Management & Financial Advice Association (PIMFA).
Last month saw the FCA bolster its efforts to tackle the surge in Covid-19 related fraud by pledging to spend £2.3m on a campaign to build on its existing ScamSmart campaign, which aims to mitigate the harmful effects of fraud. In addition, the National Cyber Security Centre launched a scam reporting service where people can report suspicious emails to the UK government.
Are these warnings and campaigns enough?
Since the start of the pandemic, only one in five banks accredited to hand out the Coronavirus Business Interruption Loan Scheme implemented protocols to ensure protection against cyber criminals impersonating the organisation. The lack of initiative leaves vulnerable businesses at greater risk of email fraud and financial harm.
The wider spike in financial crime also comes amid reports that banks are ‘refusing’ to refund more than half of fraud victims, claiming that automated warnings are sufficient to inform customers of potential fraud. Damning evidence from the Financial Ombudsman Service suggests some banks expect customers to have a better understanding of scams than what would normally be considered ‘reasonable’.
The pandemic has seen companies move to reemphasise their core principles of empathy and humanitarianism. In all this, companies must exercise empathy towards their customers who are likely to become more vulnerable to scams leveraging their growing financial and social uncertainty.
Communication serves a critical role as opportunistic fraudsters prey on people’s fears. Banks and other financial institutions must step up their efforts to provide transparent and timely updates on the risks posed by financial criminals. The campaign plans by the FCA and NCSC look promising, and if more financial institutions follow suit, it will ensure consumers remain one step ahead of fraudsters – providing well-needed reassurance in these uncertain times.